OFAC's 50 Percent Rule treats a firm as blocked when blocked persons own at least 50% in aggregate, directly or indirectly. It extends screening beyond names on a list, using ownership analysis to identify unlisted entities subject to blocking and sanctions reporting requirements.
TL;DR:
- Entities are blocked at 50% aggregate direct or indirect ownership by blocked persons.
- An entity can be blocked without appearing on the SDN List.
- Control alone does not trigger this ownership rule; other sanctions restrictions can still apply.
Summary
Blocking can extend to an unlisted entity
OFAC's rule concerns property and interests in property of entities owned fifty percent or more in aggregate by one or more blocked persons. Such an entity can be blocked even though its own name is absent from the SDN List. A screening process limited to the immediate counterparty's name can therefore miss a relevant restriction. The ownership question needs to be assessed alongside identity and the governing sanctions authority.
Aggregate and indirect ownership matter
Interests held by several blocked persons are considered together under the rule. Indirect structures also matter, including ownership through entities that are themselves fifty percent or more owned in aggregate by blocked persons. OFAC's FAQ 401 gives examples of these chains. The analysis should follow the actual structure and the rule's treatment of each layer, rather than rely on a simplistic name check or assume that all indirect interests can be assessed using one unqualified multiplication formula.
Control and other restrictions remain separate
Control without the relevant ownership threshold does not automatically make an entity blocked under this particular rule. Other designations, sanctions provisions and due-diligence considerations can nevertheless be relevant. The rule also should not be mechanically applied to every non-SDN restriction, which can have a different legal scope. Identifying the particular blocking or other measure is therefore necessary before deciding how an ownership relationship affects the proposed activity.
Evidence for the transaction decision
A defensible assessment connects the relevant ownership information, changes over time and sanctions status with the entity and transaction concerned. A potential name match and a confirmed qualifying ownership relationship require different investigation steps. Jurisdiction, licences and exceptions can also affect the permitted response under the applicable programme. The rule makes ownership information part of sanctions compliance without turning every uncertain corporate link into an automatic conclusion that all transactions are prohibited.
Keywords
- OFAC ownership
- 50% rule
- aggregate stakes
- indirect holdings
- blocked persons
- unlisted entities
- ownership chains
- sanctions blocking
- jurisdictional nexus
- control distinction